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Small Business Property Insurance   Continued from << Previous Page


Coverage is limited to $2,500 for furs, watches, jewelry, precious metals, patterns, dies, molds and forms. If additional coverage for such property is needed, it can be purchased separately.

Earthquake and Volcano Coverage – You may add this endorsement to your BOP to protect your business property from losses due to these perils. A different method of calculating deductibles, as a percentage of the coverage rather than as a flat dollar amount, may apply to this coverage.

Electronic Commerce – If your business relies on e-commerce—that is, business activity conducted over the Internet—you may want to add the Endorsement for


Electronic Commerce to your BOP. The insurer covers your lost income and extra expenses in the event your ability to conduct e-commerce is slowed down or stopped due to the causes of loss covered by the BOP. The endorsement also provides coverage for the cost of reconstructing electronic data if it is lost due to a covered cause of loss or if it is stolen by someone other than an employee, volunteer worker or contractor.

Employee Dishonesty – Burglary and robbery insurance does not cover losses caused by employees or authorized representatives who commit dishonest acts. Employee Dishonesty Insurance provides this coverage.

Most experts agree that businessowners tend to greatly underestimate their vulnerability to theft by their own employees. According to the Association of Certified Fraud Examiners (ACFE), the average business loses 6 percent of its total annual revenue to employee fraud. The ACFE says smaller companies, particularly those with fewer than 500 employees, are most susceptible to these losses. Virtually any business with employees is at risk of losses caused by employee dishonesty. As with other causes of loss, effective loss control measures can go a long way toward reducing this loss exposure.

Employee Dishonesty Insurance covers losses caused by temporary or leased workers as well as employees. Many employee fraud schemes go on for years before they are detected. If you have added this coverage to your BOP, your insurer will pay for a covered loss or damage sustained during the policy period and discovered no later than one year from the end of the policy period.

Food Contamination – If you are involved in a food business, there is always some risk that food you sell could cause food poisoning or transmit a communicable disease from an employee of your business. This risk can, of course, be reduced and controlled by following a good risk management plan, but it can never be totally eliminated.

The Endorsement for Food Contamination provides coverage for most of the expenses you would incur if food you sold caused food poisoning or disease. Coverage includes the cost of additional advertising to restore your reputation.

Mechanical Breakdown – This option provides coverage for mechanical or electrical breakdown to your boilers, pressure vessels, refrigeration systems, piping, and mechanical and electrical machines or apparatus that generate, transmit or simply use mechanical or electrical power. For many businesses that depend on such equipment, a breakdown means the inability to operate and loss of income. If you run a sawmill and the saw breaks down, for example, you’re effectively out of business until the saw is repaired. Mechanical breakdown coverage might be a wise investment to cover this type of risk.

Money and Securities – You have the option to add coverage for money and securities to your policy. The insurer covers the property on the business premises, while it is at a bank or savings institution, when it is in the custody of any employee or businessowner in his or her living quarters or while it is in transit between any of these places.

More Coverage for Valuable Papers and Records – As part of your loss control plan, to the extent feasible, you should keep backup copies of records in a separate location and valuable papers in a fire proof safe or a bank safety deposit box.

For some businesses, however, it may be in the nature of the business that certain valuable papers and records are vulnerable to property loss. Should you lose valuable papers and records as the result of a covered cause of loss, your basic BOP will pay the expense, up to your policy limit, to reconstruct the records.

If needed, you may add more coverage to your BOP for the cost to reconstruct valuable papers and records, including those that exist on electronic media. The covered property includes documents, manuscripts and records (including abstracts, books, deeds, drawings, films, maps or mortgages). It also includes electronic data processing, recording or storage media; data stored on such media; and programming records used for electronic data processing or electronically controlled equipment.

Newly Acquired or Constructed Property – If your policy covers buildings, you may extend the coverage to newly acquired buildings intended for similar use as the insured building or as a warehouse. This coverage also applies to new buildings while being constructed on the premises described in your policy. Any newly acquired business personal property is also covered. This is temporary coverage that provides time to report the new property to your insurer. The coverage expires 30 days after you acquire the property or begin construction.

Outdoor Property – You may extend your policy’s coverage to apply to outdoor items, including signs, fences, shrubs and plants, and satellite dishes. Debris removal of these items is included. The most the insurer will pay under this extension is $2,500 and not more than $500 for any one tree, shrub or plant.

Outdoor Signs – For some businessowners, the only outdoor asset not covered by their basic BOP that they wish to insure is outdoor signs not connected to their building. The BOP provides an option to add just this coverage.

Personal Effects – You may extend your coverage to apply to personal effects owned by officers, managers and anyone who works at the company. There is a $2,500 limit on this coverage. It does not apply to loss or d


By the Insurance Information Institute www.iii.org